Myanmar moves forward

The government of Myanmar is about to take dramatic steps to spur economic development and improve government efficiency. Several significant cabinet changes are in the pipeline, detailed economic strategies are being finalised and a shake-up in the bureaucracy is already under way.

These planned changes in ministerial personnel are aimed at strengthening the government’s leadership in the area of economic development, especially in the power sector.

August is going to be a very significant time for the government as it makes executive changes and lays out detailed strategic plans for the future, according to insiders. While the plans will strengthen the government’s leadership on the economy — something the local business community has been very vocal in complaining about –it will reinforce liberal economic practices and privatisation, with the central aim of enhancing the role of business and attracting investment — both foreign and local.

“Economic liberalisation is the cornerstone of the government’s economic policies,” Sean Turnell, an Australian academic, expert on the Myanmar economy and special adviser to the government, told me recently “A free market, open trade and good governance: everything else cascades down from those principles.” Investment, taxation, infrastructure and agriculture are the government’s key concerns at present,said Mr Turnell, who is currently based in Nay Pyi Taw.

But one of the key failures of the government to date, say sources close to the top leadership, has been the lack of coordination between ministries involved in the economy, a lack of a coherent direction and an inability to communicate policies and plans to the nation, especially businesses.

The appointment of Winston Set Aung, a former central bank deputy governor, as an additional deputy minister of planning and finance, is meant to rectify these gaps and weaknesses in economic policy, implementation and communication.

Set Aung’s primary task in the coming weeks will be to “coordinate, consult and communicate the government’s evolving economic policies,” a senior government official said on condition of anonymity.It is understood he will have one foot in the president’s office and the other in the ministry to strengthen his influence, especially within the bureaucracy.

Western-trained, accessible and passionate, Set Aung is expected to bring a breath of fresh air to government and give the administration a new impetus and vitality. He also played a crucial role in Thein Sein’s government, as deputy commerce minister, until he was moved to the Central Bank of Myanmar in 2013.

He was the architect of the previous government’s policies to creating special economic zones (SEZ) in order to speedily attract foreign investment. He was also instrumental in the creation of the Thilawa SEZ on the outskirts of Yangon, a joint venture with the Japanese government. The two others were Dawei in southern Myanmar — in collaboration with Thailand — and Kyaukphyu in the west of the country, where China has taken the lead role.

Set Aung also has the advantage of being a member of the National Economic Coordination Committee. And while it has never lived up to its name or potential, he may now be able to leverage his two roles to ensure that all ministries involved in the economy are singing from the same songbook.

The business community has been quick to welcome his appointment, though many are cautious and sceptical that he will have the necessary room to manoeuvre. There is little doubt that State Counsellor Aung San Suu Kyi — having appointed him — will support him. But he will have to produce results quickly to justify the faith that the government has placed in him.

It’s a tall order, but one that many expect him to fulfill, and the business community will enthusiastically welcome anything that promises to kick-start the economy. Set Aung is particularly open to foreign businesses and donors, and international financial organisations, as he has had practical experience of working for and with them in the past.

Of course, he is not without his detractors, and there will be substantial resistance within the bureaucracy, as many there see him as an upstart and too pro-Western. So apart from the high expectations, he will have to tread carefully, especially with the bureaucrats. He does have a significant advantage over other ministers in that he has intimate knowledge of the bureaucracy as deputy commerce minister and a deputy central bank governor, so they will find it hard to put anything over him.

While this may be the key cabinet change in the government’s fight-back campaign, it is by no means the only one. The minister of Electricity and Energy Pe Zin Tun has officially resigned — ostensibly because of ill health — and been replaced by the construction minister, Win Khaing.

The latter will oversee both ministries for the time being — with a deputy minister to be appointed to solely look after electricity, according to senior government sources. According to government insiders, his predecessor left before he was shoved out — which many senior National League for Democracy (NLD) officials believed was on the cards.

Insiders say the change of the guard at the electricity and energy ministry is highly significant, as it indicates that Aung San Suu Kyi understands that for general development, building a prosperous business sector and placating an increasingly impatient electorate — especially in the urban centres of Yangon and Mandalay — improving the provision of electricity is pivotal.

And there is an enormous workload facing the incoming minister. Apart from the future of the controversial Chinese-backed Myitsone Dam, there are three other proposals on the table from Chinese state-owned companies to plug the national power grid into Yunnan’s electricity network, according to Myanmar consultants working with them. Rural Yunnan already supplies surplus power to the more developed parts of eastern China, as well as Laos and Vietnam.

But apart from hydroelectric generation, Myanmar is also considering coal-fired power stations, and other options such as importing liquefied natural gas (LNG) — especially from Singapore and Thailand. These issues need to be speedily resolved, and electricity generation ramped up as quickly as possible, for there are fears of severe shortages early next year, after the rainy season subsides. And apart from environmental issues, there are the critical concerns of local communities facing disruption and resettlement.

No doubt these are the two most important positions in the cabinet reshuffle. Insiders suggest there will be others, though they believe Aung San Suu Kyi is reluctant to carry out a major reshuffle — because of loyalty to the ministers, was how one insider put it to me — though she regards most of them as underperforming.

“The Lady rightly takes solace in the fact that her ministers are not corrupt. As well, all the people chosen to be ministers were largely untested as there has been no civilian governance for so long,” said an adviser. But of course the civilian leader’s other overarching concern is how to maintain stability — and not to prematurely alienate the bureaucracy.

Other ministers expected to be removed are in the commerce, industry, tourism and ethnic affairs portfolios. Senior government and NLD officials say they don’t know who might replace them, though some suggested that deputy ministers would be promoted. There may also be extra deputy ministers assigned, according to another government source. Aung San Suu Kyi is playing her cards close to her chest, said a senior NLD source. “She doesn’t like to be second-guessed,” he said.

But there is no doubt that the primary purpose of the cabinet changes and expected policy announcements is to get the economy back on track.

Last week the State Counsellor’s Office issued a statement to mark a year since the administration first announced its economic plan — a thin, three-page document — roundly condemned for its lack of substance.

“The government’s long-term economic plan will take time,” the planning and finance minister, Kyaw Win said in the statement, “but [it] will bring prosperity in which all can share.”

Source: Bangkok Post

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